Bob Kinnaird. More government dishonesty on China FTA

Now that Federal Labor Leader Bill Shorten has publicly stated his opposition to the China FTA labour mobility provisions, the Coalition is ramping up its attack on union and political critics of the deal.

Trade Minister Robb lead the charge this week, with allegations of union ‘falsehoods’ and a ‘racist scare campaign’ over the China FTA that do not stack up (‘Don’t give credence to union scare campaign’, AFR, Letters, 21 July 2015).

The main alleged union ‘falsehood’ is ‘that Chinese companies will be allowed to bring in their own workforces at the expense of Australian jobs’.

The fact is that Chinese companies will be able to do exactly this under the FTA package that Mr Robb negotiated. Under the terms of the China FTA, any China-based enterprise with ‘a contract for the supply of a service within Australia and which does not have a commercial presence within Australia’ can bring in an unlimited number of its own Chinese employees as skilled workers on non-concessional 457 visas, without ‘labour market testing or any economic needs test’ (ChAFTA, Chapter 10, Annexe 10-A, Clause 10(a)).

This includes Chinese companies with contracts on ‘significant infrastructure projects’ of $150 million or more under the Investment Facilitation Arrangement (IFAs) in the China FTA package.

This means a China-based enterprise contracted to perform say all the engineering and design work on a project in Australia, or all the welding work, can bring in unlimited numbers of Chinese engineers or welders to Australia on non-concessional 457 visas, with no obligation to even look for skilled Australian engineers or welders, let alone prove that none are available.

Chinese companies with these contracts can access unlimited numbers of 457 visas for their Chinese employees in all ‘skilled’ occupations – meaning all 651 occupations currently on the non-concessional 457-eligible list (known as the Consolidated Sponsored Occupation List or CSOL), and any added to the list over time. ‘Non-concessional’ means the Chinese workers must meet all the standard minimum requirements for a 457 visa, including minimum English language skills (which the Coalition has reduced), qualifications and salary.

The FTA also grants the exact same 457 visa privileges to China-based companies transferring their staff to Australia as ‘intra-corporate transferees’ moving ‘to fill a position in the branch, subsidiary or affiliate of the enterprise in Australia’. These include Chinese and other foreign nationals ‘with advanced trade, technical or professional skills’, who can be moved to Australia in unlimited numbers with no 457 LMT, for any reason including to perform work associated with ‘significant infrastructure projects’.

Mr Robb’s China FTA also permits unlimited numbers of Chinese workers as ‘installers and servicers’ of machinery and equipment where installation or servicing by the supplying Chinese company ‘is a condition of purchase of the machinery or equipment’. These Chinese workers enter on shorter-term 400 visas also with no labour market testing, like the non-concessional Chinese 457 visa workers mentioned above. Chinese project investors in Australia will preference suppliers of cheaper Chinese machinery and equipment, so we should expect many Chinese 400 visa workers under the FTA.

Chinese companies can also bring in their own workforces of concessional 457 visa workers under these IFAs. ‘Concessional’ 457 visas mean Chinese and other foreign workers in semi-skilled occupations, and those in skilled occupations who do not meet the standard minimum requirements for a 457 visa, such as minimum English language skills. The government tries to conceal the fact these are concessional arrangements for lower-skill workers, with Ministers like Mr Robb saying IFAs are for ‘skilled’ overseas workers.

The arrangements for concessional 457 visa workers under IFAs are different to those for the non-concessional 457 workers covered by the FTA itself. The government has surrounded these IFAs with the fog of obfuscation since they were first announced back in November 2014 and has done little in nine months to clear that fog and persuade Australians that these are in the national interest.

Unlike the non-concessional 457 visas for Chinese workers, there will be negotiated limits on the numbers of concessional 457 visa workers on IFA projects. The number of concessional 457 visa workers and ‘guaranteed occupations’ on an IFA project will be set in an umbrella IFA project agreement, from which individual direct employers on the project will then draw down under concessional 457 ‘labour agreements’. The MOU expressly rules out any requirement for labour market testing for a project company ‘to enter into an IFA’, which will be valid for at least 4 years.

It now seems that the total number of concessional 457 visas approved for an IFA project will be determined based on consultants reports and similar speculative data as to projected future ‘shortages’ of Australian workers in up to 4 years time, provided to the Immigration Department (DIBP) by the project owner. On this basis, the IFA project owner will get approval for say 1,000 concessional 457 visa workers over the life of the project. IFA project employers can then ‘bid’ for a share of the 1,000 concessional 457 workers.

To access these 457 workers, there is no legal obligation for these IFA project employers to undertake 457 labour market testing (LMT) as legislated in the Migration Act 1958. The legislated LMT obligation does not apply to sponsors of concessional 457 visa workers under labour agreements, only to sponsors of non-concessional 457 visa workers. Labor must surely regret this oversight in its 2013 legislative amendments on 457 LMT which the Coalition will not remedy. Its policy is the abolition of legislated 457 LMT entirely.

The MOU says that direct employers on IFA projects may be required to undertake some form of labour market testing (LMT) before accessing concessional 457 visa workers. The MOU also states that ‘where labour market testing is required, employers may satisfy this requirement by demonstrating that they have first tested the Australian labour market and not found sufficient suitable workers. DIBP will make publicly available information on how any labour market testing requirements could be met’ (MOU on IFA, clause 8 and footnote 6 – emphasis added).

On 22 July, Assistant Immigration Minister Cash said DIBP Project Agreement guidelines for companies seeking to recruit overseas workers will give effect to IFAs. These guidelines, dated May 2015 but strangely not mentioned in DFAT’s ‘Myth-busting’ Fact Sheet on the FTA issued in mid-July, state that employers: “must provide a comprehensive written statement of the labour market need for the requested occupation(s), demonstrating ongoing shortages …. as well as evidence that you have made significant efforts to recruit workers from the Australian labour market within the previous six months.” Furthermore: “The department will only enter into a project labour agreement where it has been satisfied that Australians have been provided first opportunity for jobs.”

This is a much lower standard than the legislated 457 LMT obligation where sponsors must prove to DIBP that no suitably qualified Australian is available to do the job, at the time of each 457 visa nomination, where the LMT condition applies. Like most obligations and provisions in concessional 457 labour agreements, it also is embedded only in Departmental ‘guidelines’ and policy, not legislation or regulations.

The Minister’s attempt to assure that these ‘guidelines’ offer adequate protection for Australian workers also conveniently ignores the fact that these applications for concessional 457 visa workers by individual IFA project employers will be made in a context where the project owner has already secured approval for large numbers of these workers, in the umbrella IFA agreement.

This places undue and unfair pressure on DIBP officers to approve 457 visa applications from individual IFA employers, especially operating in a high-profile visa program area with no legislative framework and far too much room for Ministerial and political intervention.

The Coalition government will not admit that these IFA arrangements are unprecedented. Australia has never before in an FTA package deal permitted concessional 457 visas for even skilled workers, let alone for semi-skilled workers (like concreters, scaffolders, truck drivers, even office workers). It is also unprecedented for any Australian government to allow foreign companies access to concessional 457 visa workers under labour agreements. Until the China FTA package, only Australian businesses could access these concessional 457 visa workers because these arrangements are too high risk for abuse and exploitation.

Time for government honesty about the China FTA labour mobility package.

Bob Kinnaird is Research Associate with The Australian Population Research Institute and was National Research Director CFMEU National Office 2009-14.